ArcelorMittal, one of the world’s leading steelmakers, is facing scrutiny over its commitment to decarbonisation, as a recent report from advocacy group SteelWatch reveals that the company has only invested one third of the $1.5 billion it pledged towards decarbonisation efforts between 2021 and 2023.
The steel giant, which produces emissions equivalent to Belgium’s entire output, had estimated a $10 billion investment by 2030 for decarbonisation, with €3.5bn ($3.7bn) in subsidies already secured to aid its transition.
In Spain, ArcelorMittal secured a significant €450m ($483m) government grant aimed at developing zero-emission, green hydrogen-based steelmaking. However, the company has recently postponed plans to utilise green hydrogen in favour of carbon-intensive fossil gas, despite continuing to benefit from the subsidy.
“ArcelorMittal makes a lot of shiny claims about cleaning up its operations, but it has no right to call itself a climate leader when it secures billions in government subsidies before backtracking on plans to end fossil fuel use,” said Caroline Ashley, Director of Steelwatch.
This reliance on state support coincides with record shareholder returns, as ArcelorMittal has returned $11 billion to shareholders through buybacks and dividends over the past three years alone.
“For every dollar ArcelorMittal puts into decarbonisation, it puts 22 into its shareholders pockets,” said Julia Hovenier, campaigner at BankTrack & the Fair Steel Coalition.
Despite positioning itself as a proponent of environmental stewardship, including sponsoring this year’s Olympic Games in France and providing low carbon steel for the Olympic torch, ArcelorMittal faces accusations of greenwashing.
In response to these allegations, SteelWatch and the Fair Steel Coalition are launching a new campaign titled “Shiny Claims, Dirty Flames”, aiming to challenge the company on various fronts, including human rights abuses, environmental pollution and climate change.
In a right of reply response to gasworld’s sister publication H2 View, an ArcelorMittal spokesperson said, “[ArcelorMittal] has not backtracked on any plans and any statements indicating so imply a lack of understanding of both the plans we have set out and the availability of the clean energy the steel industry requires to transition to Net Zero.”
At this stage, green hydrogen is not available in Europe…
According to the company, it had clarified that its planned direct reduce iron (DRI) units would initially operate on natural gas before switching to green hydrogen ‘when green hydrogen was available at competitive prices.’
“At this stage, green hydrogen is not available in Europe,” the spokesperson said. “There is no indication that it will be available at the price or capacity we need to provide competitive low-emission steel by 2030.”
“As we set out in our second Climate Action Report, our European and Canadian decarbonisation transformation plans centre around transitioning from blast furnace-basic oxygen furnace (BF-BOF) steelmaking to DRI-EAF (electric arc furnace) steelmaking,” said the spokesperson.
Leveraging its ‘political clout’
The report asserts that the company has advocated for less stringent climate policies in the EU and South Africa.
“One could expect a self-proclaimed corporate climate leader to leverage its political clout in order to advance pro-climate policies,” the report reads. “But in practice, the evidence suggests political clout has been used either to weaken climate action or has been focused on securing subsidies.”
In reply, ArcelorMittal claims that its approach on climate policy is to not block it, but rather ‘speak up when we believe climate policy could impact the viability of the steel industry to operate’.
“The purpose of climate policy we believe should be to enable and incentivise the steel industry to transition to lower-carbon technologies,” said the spokesperson.
“If its result is actually to make steelmaking unviable then we believe it is counter-productive, not fulfilling its purpose and potentially only leading to carbon leakage and theoretically higher emissions.”
The company stated that it is ‘fully committed’ to conducting all its direct and indirect policy lobbying and advocacy work in line with the Paris Agreement.
Broader impact
ArcelorMittal’s decision to continue constructing blast furnaces, particularly in India through its joint venture with Nippon Steel, raised concerns to SteelWatch about the company’s future emissions trajectory.
Known as AM/NS India, the 60:40 joint venture is not included in the company’s 2030 target to reduce the carbon intensity of the steel it produces by 25%, which is on a Scope 1 and 2 basis only, said the company.
The spokesperson stated that the JV sits within ArcelorMittal’s Scope 3, and hence is part of its 2050 Net Zero target.
“However, AM/NS India is aware of the need to support India’s economic growth and the responsibility it has to start a journey to Net Zero.”
“We continue to progress our decarbonisation plans and remain confident in both our ability to achieve Net Zero by 2050 and in the opportunity for steel as a critical material in a low-carbon world.”
Currently, ArcelorMittal operates 33 coal-based blast furnaces globally. Despite mounting pressure, the company confirmed in April that it does not plan to commit to a science-based climate target aligned with limiting global warming to 1.5 degrees Celsius.
“We need strong action from governments, and financiers to get ArcelorMittal’s investments in line with a just and fossil-free future,” said Hovenier.
Steel emissions
The steelmaking industry accounts for around 8% of global CO2 emissions. Considered to be a ‘hard-to-abate’ industry due to the challenge of electrifying production and the costs of the transition, steelmaking must cut emissions by 93% to meet Paris Agreement targets.
The need for decarbonisation is being driven by a noticeable shift in customer demand towards carbon-friendly steel products, with major players like Volkswagen and Toyota aiming for complete carbon neutrality across their value chains.
Carbon emission regulations are also becoming increasingly stringent, especially with initiatives like the European Green Deal, which include targets for reducing CO2 emissions and higher carbon prices.
There is also a growing focus from investors and the public on sustainability. Entities like the Institutional Investors Group on Climate Change and investment firm BlackRock are raising expectations for industries like steel to address climate concerns.
